Transcripts For CNBC Power Lunch 20151113

Been chipping away at flash flooding jobs. Now automation robots may be coming to the csuite. I thought some of our ceos were robots, i dont know. You better be hoping theyre not watching. Its a tale of two economies right now here in the United States. The Consumer Holding up but not so much on the industrial side. Morgan brennan is taking a closer look at the socalled industrial recession and what that could mean for the overall economy. Morgan . Thats right. So as commodities continue to collapse, Global Growth weaken, and the dollar strengthen, energy, mining, and manufacturing all struggling. We have seen Companies Slash cap ex, jobs, and financial outlooks and now a number of experts ever warning a socalled industrial recession is taking root, including u. S. Steel ceo mario lo longhi just yesterday. Its happening, its not imminent. For us its more than a reseths. Steel has been hit especially hard. What executives call a decoupling from the economy. But there are several key economic metrics that are flashing warning signs. According to the federal reserve, Industrial Production declined the past two readings and 7 of the past 9 and the ism fell to 50. 1 in october. The lowest reading in 2 1 2 years and were right on the cusp of a potential contraction. Joe lavorgna says whats unclear is how much of the weakness is inventories or the rapidly depreciating dollar. The question now, if the industrial recession is setting in, could this affect the broader u. S. Economy . Well, lavorgna and others say not at this point since manufacturing stim still a relatively small part of the economy but that could change if consumers pull back on spending and that makes data like todays disappointing retail sales number that much more important to watch. Thank you for setting the whole scenario up. So the question here is are we in danger of falling into an industrial recession and possibly a broader economic recession . Lets bring in cnbc contributors ron insana and michael farr. Michael, what do you think . Maybe. I dont think so ultimately, but the dollar has been very strong and i think thats the real story behind the story is the strength of the dollar. Weve seen weakness abroad. Weve had weak Commodity Prices. These are all weighing on the manufacturing sector, weak capital investment. We havent seen a lot of it, and cheap labor markets have continued to keep that down. But the strength in the dollar could also begin to import a little bit of deflation as were able to buy cheaper and cheaper goods and services. So its not strong. I dont think were there yet, but theres been a divergence between the manufacturing and the nonmanufacturing side. Right. So that divergence is really rare. Its going to come together one way or the other. So we either see the manufacturing tick up or nonmanufacturing tick down. With the stronger dollar, im keeping a closer eye on the nonmanufacturing probably giving a bit away. Thats a maybe. Its not a no, ron. What do you think . I think i may be a little more worried than michael in so far as theres a negative feedback loop developing. Chinas manufacturing is weak, russia is in recession, japan is in recession, eurozone data was weak. As the dollar strengthens, it weakens profits for companies that do business overseas so i worry theres still more than a whiff of deflation globally and that the fed may very well mistime this rate hike and that could cause in how much choice do they have . They keep pushing it and miss the boat completely . Japan has been doing it for 25 years. Theyve made a series of policy mistakes and theyre back in recession, still suffering from deflation. So, you know, whether people want to move off zero or not, there is a set of economic realities out there that suggests maybe, look, your credibility is less important than doing the right thing at this juncture. I dont know, ron. Hang on because the credibility i think is all important, particularly when it comes to the fed. And when youve got over 90 of the economists now listening to even dovish fed governors suggest that theyre going to do it in december, i dont see how they cant do it in december. Theyve got to hang onto their credibility here. This stronger dollar is a headwind and to rons point, they probably based on data should not increase rates here but i think again theyve painted themselves in a corner. Do like the reserve bank of new zealand. I talked to an economist who said thats their scenario. Later on this year theyll have to start cutting again. If whats going on in the world continues to go on, well end up with negative Interest Rates next year and i think thats my base case is they unwind and then ultimately we end up with negative rates because deflation has become too powerful a force in the Global Economy and the recessions we see overseas will invariably have a feedback loop and its unfortunate because manufacturing was becoming one of the stronger parts for us which was good and now its becoming one of the weaker parts. Were already seeing it too. When you look at the dollar yearoveryear and look at the trade deficit and the trade gap, our work shows its probably trimmed yearoveryear about a half a point off of gdp growth already. That strong dollar if you listen to kudlow is a really good thing but theres a downside to it, too. Theres always a downside. Its a doubleedged sword. Michael, can i get your thoughts on ge versus sink ronnie . Ge, of the two, theres a reason thats spinning off synchrony now. The credit cycle has troughed. I dont think they have many losses. That unsecured Consumer Credit business is not one i want to be in and certainly not when a credit cycle changes. So id prefer the ge piece. Im probably not ready to buy it quite yet but i like anything with a 3 dividend. If you were being asked to tender if youre already a ge owner, the thing you might want to do is split and go 50 50. Take half your position and go into synchrony but retain a core position in general electric. They are paying 107 per so youre getting a bit of a premium up front. Id keep my ge. Youre on the same page with that one. I like to end on a sort of agreement note like that. 50 agreement. Thank you very much. Have a great weekend. I set my watch for this every week. Brian sullivan, news alert. Rig count. Yeah, and something has happened that has not happened in 11 weeks. Rig counts went up, not down. Not a lot. According to Baker Hughes Rig counts increased by two last week. Were still down over 1,000 from this time last year, but this 11, 12week slide in the number of rigs every week is officially over. We are up two. We keep talking about the need to keep producing oil and guess what . I know jackie d. Is coming up next, but oil falling not a lot but falling on the news, 40. 36 is the level to watch. Rig counts up for the first time in 11 weeks. Back to you. Brian, thank you very much. And lets go down to Jackie Deangelis at the nymex. Hi, tyler. Prices today nearing a 3 decline, another week where we might see nearly a 10 drop in oil. The intraday low 40. 36, so getting very close to that psychological 40 level. Now, we had the iea monthly report out saying there is a world oil glut. 3 billion barrels in storage. This is very significant, and also saying that it doesnt expect to see demand tick up. Actually it may tick down in the next year. These are not the dynamics that are going to Keep Oil Prices supported at this point. So as brian mentioned, its been another rough day for crude. Thank you very much. Wild trading day for equities. Stocks hitting their lows for the month, but we are well of d the session lows. Bob pisani is on the New York Stock Exchange floor. Hi, bob. Hello, old friend. Were getting smacked around by a number of market forces. Number of new lows has been expanding. Weve not had a very good week. Here is retailers sitting at new lows right now. A whole bunch of them at new lows, nordstrom, kohls, macys gap, tiffany, dollar general. I want to concentrate on jcpenney because they had a report generally better than people had expected yet the stock is getting clobbered down 13 . The problem is the street is just abandoning the old School Retailers in general. The good news on macys, a smaller loss thn expected and theyre regaining market share. It was a good report but it doesnt matter. The bad news is they havent had profits since 2011 and the street isnt clear whether theyre going to have profits in the future. And theyve got pressure from amazon and all of the old school fast retailers that are out there, forever 21, for example. Thats the story with the retailers. Elsewhere big tech is having problems, cisco has disappoi disappointed. Its weighing on the old school. Apple has had a bad week in general, down 6 . And down 2 today. Thats a problem. Strong dollar middle of the day weighing on commodities. You heard tyler talking about that. Energy stocks are off of their lows today but still on the downside. Still a pretty bad week overall. How does the market look . S p, well, were down 3 for the week to date and were back in negative territory for the year. The only thing up this week, tyler, utilities. Bond yields coming down, the market seems to be saying less likely fed hike out there. Notice the bank stocks, tyler, kre, they have been down this week, a sign they dont believe Interest Rates may be going up anytime soon. Back to you. A topsyturvy world we live in. Thank you very much, bob. To rueurope now, could this eurozone member be the next greece . Seema mody, which one are we talking about . Its a political crisis in portugal that could get ugly fast and essentially turn into the next greece. A new socialist Party Campaigning for reduced austerity earlier this week ousted the center right government. The man behind the movement antonio costa, a former may lor of lisbon, has support from the radical left and the hardline communists likely to be portugals next prime minister. The question is will he come in and reverse the countrys economic recovery because, remember, portugal has been seen as one of the more successful stories in europe thanks to a bailout and a reform package that includes tough austerity. Rbs says this Political Uncertainty will likely weigh on portugals funding costs Going Forward. In fact, were already seeing widening yield spreads between portuguese and german sovereign debt, the highest level since july. Credit Rating Agency dbrs which maintained its Credit Rating at bbb low today says if he derails the Fiscal Program it may downgrade the country to below investment grade. That could result the ecb kicking out portugal from the program. Another selloff on the street to tell you about. The major averages down more than 3 this week as bob just mentioned. S p negative for the year. Europe, china, the fed, all those worries coalescing. Are the same issues that drove the selloff in august going to come to play again . Well tackle that one. Youre watching cnbc, first in business worldwide. Some neighbors are Energy Saving superstars. How do you become a superstar . With pg es free Online Home Energy checkup. In just under 5 minutes you can see how you use energy and get quick and easy tips on how to keep your monthly bill down and your Energy Savings up. Dont let your neighbor enjoy all the savings. Take the Free Home Energy checkup. Honey, we need a new refrigerator. Visit pge. Com checkup and get started today. And welcome back to power lunch, folks. Im tyler mathisen. Were glad youre with us. Fit bit getting couch potatoes. The wearable fitness make irpricing a second offer at 29 a share and that stock is down now 13 on the day. Yelp going the other way. The Consumer Review website upgraded to outperform from sector perform at rbc, up 4 . Game stop down more than 10 . Pacific crest downgrading that video Game Retailer to sector weight from outperform. To dominic chu we go for a quick market flash. Shares of Applied Materials you can see are up by about 4 to 5 near the highs of the day. The maker of machines that are used to make computer chips matched profit estimates with suggested Fourth Quarter numbers. Sales came in line with estimates. Also provided a solid First Quarter earnings outlook for 2016. Shares you can see up about 5 , mandy. Back over to you. Thank you very much. Rising concerns about you name it you got it, chinese growth, the commodity crush, et cetera, et cetera, seem to be keeping investors wary of the markets and theyre starting to be thinking about whether or not we could go back to the selloff in august. Lets bring in jim iuorio and jef kilburg. Do you think we could see a retest of the august lows . I dont believe we will. We made a 13 run up from the late september lows to the near highs we put in a week or so ago. That was long way to move. In that time the market faced its fears, a fed tightening. We saw the blockbuster number last friday. It didnt have a catalyst to take it to new highs. This is an interesting week in that we have draghi being assuring us hes still wildly dovish and somewhat of a crummy retail sales number. I still think its coming and i think thats what worries the market a little bit, not as terrified as it was in august. Its getting used to the idea but i think some negativity but i think 2,000 is my low on this move. Maybe not the august lows in the stock market, jim, but real quick, oil, 39 is only a stones throw away. I think were too close to this psychological 40 level not to go through it again. I think 39. 22 was the futures low two months ago. I think well hit that. I think to push below that, we need a catalyst and there are things that could happen. The saudis could jaw bone it and want it higher again. The fed could push it higher. Theres a lot of shorts in the market, too. I dont think much lower than 39. Jeff, agree or disagree with what jim has said . Well, i think jimmy brings up a great point. Look at this, were only 3 off that low in crude oil, 39. 22 and we put that low in august 24th. Were 10 higher in the equity market. 200 handles higher in the s p 500. So i think sentiment is very different and its more representative in the vix. The vix was trading at 53, mandy, on that august 24th. Its 63 lower at 19. 5. I think jimmy is right. Well see a tug of war as we understand all the rhetoric coming out of the fed as well as the ecb. I dont see us retesting the lows of august anytime soon. Thank you for joining us. Enjoy your weekend. You, too. Its new Retirement Plan that has steerozero risk and it is b by the government but is it a good way to save for your retirement . As we head out lets look at the most widely held stocks. Apple down by 2 . Alphabet and microsoft also down. Well be right back. When a moment turns romantic why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Welcome back to power lunch. A new governmentbacked Retirement Plan is now available. No fees, no minimum balance. No risk of losing money. Too good to be true . Not really. Sharon epperson here with that debate. Sharon . Wlg, tyler, joining me right now is jeff levine and scott hanson. He wrote about myra on the Financial Adviser hub on cnbc. Com. I want to start with you, jeff, to talk a little bit about myra, the my retirement account. You say its not perfect but it is a solid option for a lot of savers. Why do you say that . The first thing you should be doing as saver is establishing an emergency reserve. The myra has no investment risk whatsoever. It may not earn a lot, but its going to earn more than what youre getting in the bank and the bottom line is you wont lose money. It also has a very low cost. In fact, no cost whatsoever to the person who is starting it. So when were looking at someone with only a small amount to contribute to start, this is a great way to do it. So, scott, you can start a myra with as little as 2. You dont have a risk of losing money because it invests only in one thing, in a government security, a u. S. Treasury security that they say will never lose value. Right now its yielding about 2 . You say though the whole idea of myra is a misguided, bureaucratic mess. You wrote about this on cnbc. Com. Scott, why do you say that . Here is my frustration. There are so many Retirement Plans out there today. The 401 k , the 403b, the roth, i can go on and on. Yet this is one more Retirement Plan. Theres a whole industry out there just to help people like me understand the differences in Retirement Plans so i can explain them to clients. One more Retirement Plan, i dont know how this is going to make it any easier for folks to save. Jeff has a great organization. I send my advisers out to his twoday boot camp to learn about two days to learn about the he nuances of Retirement Plans. Here is the nuance, scott. This is for people who dont save right now. The idea is to get people who dont have a lot of money to save who are very afraid that if they put any money in the markets, its going to go down eventually, they dont want to see that happen and thats why this myra was started. Is that right, scott . If not that, what else do you do . I dont think this is the reason these people arent saving. If youre living paycheck to paycheck and getting the cash advance loan to get your rent paid, youre not going to be saving for retirement. Thats the reality. That is not why people arent saving. Its not about risk. Its that its so complex, they dont know where to turn, and theres already we have a savers credit out there right now. The irs will give someone up to 1,000 in a tax credit to save in their retirement but people arent taking advantage of it. I look at this as one more plan. Id love for congress, the administration to get together and say lets have a simplified process where we could all save the same amount. We could all choose im going to let jeff get in here. Why do you think its still a viable option. Its a fair point. Thats one of the beautiful things about the myra. Its very simple. You put your money in, open up the account, and let the interest grow. Theres not much to think about. If you make less than 130,000 as a single filer or less than 190,000 and youre married and file a joint return, you can open up this account. You put money in when you want to up to 5,500 a year. Theres a lot of complexity but when it comes to the myra this is as simple as it gets. A lot of people want that type of simplicity. Thank you. Theres a lot more on bc. Com. You what tonight check out scott hans hansons article on power lunch. Cnbc. Com. Thank you very much. To the bond market we go. Rick santelli, how are we fin nshing up the week . Were finishing up the week in a predictable fashion. Consider a week ago was the big labor report. Lets make that the fulcrum here. First twoday chart of 10s. Below yesterdays low yields even before the weak retail data came out. The 5th was before the big jobs number. Lets see how that number affected the markets and where we are at today. Of course, on 10s, weve definitely started to give it up a bit. 234 was locked in as the high yield close. Maybe the s p 500 is more indicative. Close to 2100 the thursday before the big report. And you see where the cash market is now, right around 2032 so weve given up 67, 68 points. And if we look at the dollar index, its the one market that isnt giving up the roost. It is Still Holding firm thinking that a fed tightening is on the way. More data points like today though, you want to watch that dollar index. Mandy, back to you. We certainly do. Okay. Corporate leaders have always been looking for ways to cut costs and be more efficient by replacing workers with machines but is the csuite now in danger of being replaced themselves by robots . How ironic. Details of a new report coming your way. Also lets take a look at the dow movers. Dupont is the biggest winner. It looked like nike is down by over 3 , and cisco down by nearly 7 . Do not go away. Hi, everyone. Im sue herera. The two biggest daily fant asy Sports Companies have asked a new york judge to stop the states attorney general from ordering them to stop their business. David sweat, who staged a daring escape last summer from a new york prison before being captured three weeks later pleading guilty to his latest criminal charges. The d. A. Asking the court to impose 80,000 in restitution. Sweat has been in solitary confinement since his capture. Ohoh spaghettios. Campbells is recalling due to a piece of plastic which could peel off. And googles selfdriving car may be able to navigate on its own but it still cant avoid the police. It was stopped for driving too slowly. Google says its capped the cars speed at 25 Miles Per Hour for safety. That is the cnbc news update this hour. Ty, back to you. I wonder who gets the ticket there . Probably google but can you imagine send the ticket to google. Can you imagine being the officer and coming up to the drivers said and theres nobody there . Could you pull out your license and registration. Maybe not. Dominic chu. I think you have to have a license to get a ticket but i have no idea. Were watching shares of personal and Auto Loan Company springleaf holdings. Shares up by 13 . In a press release the company saying it reached a settlement why the Justice Department thats going to allow it to go ahead with an acquisition of one Main Financial holdings from citigroup. Springleaf will have to divest 127 branches to make this go forward. Thats 6 of the total outlets springleaf has. They were halt the on and off all morning. Up by 13 . Thank you. The closing trades on gold crossing as we speak. Jackie deangelis watching them all at nymex. A little pressure on gold prices today. Closing just around that 1,080 mark. This is really a euro dollar problem. This is a fed impact on the dollar problem. Dollar index over 9 is not good for any of the commodities, including the precious metals. A near 1 loss on the week. This has been a bit of a slide for gold prices. Under that 1,087 support level. At this point traders are saying the next stop could be the low 1,060 range if nothing changes here in terms of the trends that were seeing. The rest of the metals are under pressure as well. That is because oil prices are declining putting pressure on stocks and, of course, when we see those things happen, the Industrial Metals suffer as well. Back to you. Thank you very much, jackie. The dow falling more than 3 so far this week. Bob pisani joins live from the New York Stock Exchange. Just off the lows but were having problems. Were hitting a lot of new lows in retail and energy this week. New lows expanding is the key story. 3 to 1 declining to advancing stocks. Volatility is picking up. Were at the highest level in the vix since september. Retail new lows, this is a problem all over the place. Walmart, urban outfitters, dollar general, nordstrom, kohls, gap, tiffanys, macys, i could go on and on. You get the point. Theyre giving up on the old School Department stores. October retail sales, people are buying. Online sales are up 7 yearoveryear. Theyre buying cars. Drinking more and eating out in restaurants and bars more. Building materials, theyre doing Home Improvement at home depot and lowes. Look at Department Stores, up 0e. 5 . Theyre buying just not at Department Stores. Another thing theyre buying, health and personal care, not up here but up about 5 . Have you seen ulta. A huge superstar this year. Down today but up 22 on the year. Certain categories are doing well and one of the problems is the fast fashion group, your zahras, primark are not traded in the u. S. Market or theyre private. So you cant see them here in the u. S. Elsewhere the other problem is a lot of Energy Stocks hitting new lows. Chevron is not but you see whats going on this week. This is the other big decliner that were seeing overall. Many of these stocks down 6 , 7 , 8 on the week. Guys, back to you. Robert, thank you very much. Bertha coombs is uptown following the action at nasdaq. Hi, ty. Weve come off the lows as well. Small caps actually made a bit of a reversal. Were just modestly positive now back just below the even mark. Well see as we head into the close, big cap tech remains a big drag, and thats what has the nasdaq 100 well in the red. Cisco lowering its outlook due to slowing orders outside the u. S. Thats the big drag. Applied materials, despite a beat, not enough to offset those losses. In the rest of the chip sector which is down 4 this week, thats among the biggest decliners and thats really down because of apple. Apple on pace for a 6 decline this week. Were really worried about the consumer here in the u. S. Now, not just in china. Pollo loco hitting a new low with weak sales, weak outlook. Disappointing numbers from retailers this week has really made for the prospect of weaker margins over the holidays and a lot of those stocks hitting new lows. Thats dragging down the small caps for the week. Meantime though, mylan may have lost the vote on its tender offer but look at the shares. Its helping biotech win the day. Biotech is outperforming for the week. Large cap Biotech Sector is down less than 1 for the week compared to the overall market which is off 3 . Thank you very much, bertha. Is the market drop this week similar to the selloff in august when commodities tumbled . Joining us are Lee Partridge and scott wren. Gentlemen, thank you very much for joining us. Scott, its been a bit of a rocky week. Do you think this volatility in particular the renewed rout in commodities is set to continue . Well, mandy, i tell you, commodities based on our work and our commodity teams work does not look have very good. Its the same old story, supply versus demand situation. Capacity is built on a china that grows north of 10 . Thats not happening. Its not going to happen, and so its going to take a while for the supply demand imbalance to work out. In the stock market for me these last few days, theyre all technical. Its all based on movement around the 200day moving average in the s p 500, but as far as commodities go, you know, to buy commodities in here, its a catch the falling knife situation. Can i just clarify here, scotty, are you saying we could continue to see downside in commodities like oil, et cetera, but the stock market might be okay . Like can they diverge like that . I think they can, mandy, and it wouldnt surprise me at all if we see the stock market, the s p 500, up higher. Just a week ago or so we were a percent away from the alltime record high. Wouldnt surprise me at all if we touch that before the end of the year and i certainly think that in 2016 were going to see a decent stock market and Commodity Prices not going up very much and maybe probably trying to find a bottom. Lee, i understand that you like a corner of the market that we know as mlp. You like them even if Interest Rates go up . Absolutely. So just to emphasize what scott has been saying as well if i could go back to that for a second. Definitely agree demand has been dissipating and certainly the declining growth rates in china are a lot of whats responsible for falling Commodity Prices generally. Youve got a lot of commodities off 20 for the year. The bigger picture, the fed being in play right now and the fact theyve been withdrawing stimulus since 2014 has caused a rising dollar. With the dollar up 9. 5 on a trade weighted basis, we think thats going to create a lot of volatility and a lot of headwind and the reason i wanted to point that out as a backdrop is, yes, we think well be in a volatile stock market through the election cycle in 2016, and this is an open election year, and typically during open election years where you dont have an incumbent running, the stock market does not do as well and theres higher volatility in the market. We think mlps are a great place to hide out not only have they already fallen a lot. A lot. Yeah. Shell, midstream you like down 20 to date. Enterprise products you like down over 30 yeartodate. Absolutely. And what weve always told people is that mlps can have price volatility. Theyre equities at the end of the day, but their income stream is very durable particularly if you look for the mlps that have more of the toll model as opposed to a commodity sensitive pricing model with low leverage on their Balance Sheet and are close to the demand center. So theyre long haul pipelines are trying to deliver energy to places where theyre going to process or store, not trying to gather these hydrocarbons from Site Specific operations. Thats where you get into a lot of risky plays, but absolutely we think its a great place to be. Thank you very much to both of you for joining us. Lee, scott, and you can go to powerlunch. Cnbc. Com to see how scott is playing the fed on powerlunch. Cnbc. Com. Ty . All right, mandy. New fears about the ipo market, another big offering is pulled. Diana olick is in d. C. With the story. Hi, di. Hi, ty. Loan depot, the latest ipo no go. The nonbank lender said it withdrew due to, quote, Market Conditions. Obviously the market didnt do well yesterday, not today either, but there is a bit more to it than that. Loan depot needed a strong market to support its target price of 16 to 18 a share. That was a pretty high bar to begin with. Putting the companys value at 2. 5 billion. It would have needed investors to support 30 times earnings per share based on what loan depot reported for the first half of this year. It would also mean banking literally on an awful lot of growth. Now, no question the nonbank lender has already seen huge growth since it launched just five years ago. Its the 11th largest lender and the second largest nonbank lender behind quicken loans. It posted the biggest yearoveryear gain of any top 20 mortgage orange nater in the first nine months at 942 according to inside mortgage finance. 22 billion in loans under its various brands. Nonbank lenders have been taking huge market share from the big banks while business has been good due to low Interest Rates but mortgage originations have begun to weaken. Nonbank lenders were hit hard in q nps 3. Stonegate, the last one to go public said it will be closing dozens of branches. Loan depot bills itself as a tech platform but it couldnt get that tech level. We have a new approach to stadium security. Is it really easier and safer . We will talk to the ceo whose Company Makes this device. Plus, this holiday season, nbc shares stories of kindness large and small, and weve asked others to help us spread the word. I have a very simple program. I call it five and five. I commit for five years to five institutions. My wife picks one of them, i pick the other four, sounds fair to me, and we give the same percentage every year and we commit to it. The reason i do that is i want accountability. I want these investments to really mean something to where its going. I want to see my dollars to work but i think its important to everybody to give back. Its time for the your business entrepreneur of the week. Josie in fargo, north dakota, is hard at work on sundays. Most companies in the downtown area are closed that day but josie supports the open sundays campaign. She wants people to have a place to shop every day of the week to help fargo thrive. For more watch your business sunday mornings at 7 30 on msnbc. Our cosmetics line was a hit. The orders were rushing in. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding fast. Building 18 homes in 4 ½ months . That was a leap. But i knew i could rely on American Express to help me buy those building materials. Amex helped me buy the inventory i needed. Our amex helped us fill the orders. Just like that. Another step on the journey. Will you be ready when growth presents itself . Realize your buying power at open. Com at ally bank no branches equalsits a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Welcome back to power lunch. Another retail stock getting hammered. Fossil down almost 35 . Why . Disappointing Fourth Quarter earnings, weak sales, especially of its watches. The days big drop pushing the stock down almost 70 this year. Look at that. 35 on the day. Much more on which retailers are being impacted by the rapidly changing retail landscape. Weve got that coming up in the next hour. The stadium that will host this years super bowl is already testing a new Security System that could make the process easier and safer. Dominic chu has that story for us. Do you have a bag . The future of stadium security is here. A green door and put your bag in. Silicon valley based company kyler is hoping to change the stadium experience with an automatic self service Security System. You will place your bag inside. The door will lock and then you will walk through the metal detector, go through the other side, its an automatic Self Service Intelligent system. Well determine if we have something of concern inside the bag. From explosive to Glass Containers and knives, the qylatron will lock and turn red when these items are brought in alerting a security official. They first deployed at the world cup in rio. Today theyre testing it at levi stadium in santa clara, california, home of the nfls San Francisco 49ers. A lot better than an airport experience. Very seamless. The light turned green quickly. It seemed to be a little slower. The cells are also designed to private privacy from a bag search. Its very intrusive. The whole process is less intrusive for sure but there are questions about how and if this kind of technology can be rolled out on a larger scale. Joining me to answer some of those questions, shes lisa dolev, the founder and ceo of the company that makes that qylatron you just saw. Let me start off by saying this, it looks amazing, but is it really a viable solution and can it be rolled out in mass quantities and at what cost . Well, absolutely it is a viable solution and it can be rolled out in mass quantities. In order to roll out in mass, you manufacture it in mass. And as far as the costing aspect of it, this entirely new breed of Intelligent Machines that allows you to provide these services lets us do a different type of Business Model and move over to an annual subscription type model, and that makes it really available for everyone. That can get as low as 1 per ticket for a person coming in. So, lisa, as we talk about the way the system works, you say its part of a possible ecosystem, using things like artificial intelligence. Take us through a little bit about some of the systems it kind of works with and how it works in concert with other units like the qylatron. So the machine itself is a very intelligent learning being if you think maybe similar to an ibm watson but inside a physical system, and it interconnects with other systems like it to make itself smarter, change its decisionmaking processes. It receives information from other types of systems as well that can be interconnected including databases of people that are coming in or other environmental aspects. But the big part of it is learning from its own self environment of what people are bringing inside as well as other brother and sister types of machine. Lisa, this system right now is being debuted in the u. S. At levi stadium in santa clara. Its home to the 49ers. Are we going to see this particular system rolled out for nfl games, maybe even the super bowl this coming winter . Well, the system certainly is intended to handle very large amounts of people coming through as in super bowl, but that is up to the nfl and we are actually partnered with levis stadium who share our bold vision of changing the entire entry experience and security. We could see you cant tell what you we will be with the nfl and super bowl. The next iteration of stid yaum security. Thank you so much for joining us. Lisa dolev, ceo and founder of. Qylur. Oil is the big story today getting close to the 40 a barrel level that we hit back in august. Currently sitting at 40. 32 down by 3. 4 . Thats dragging down Oil Stocks Like exxon, chevron, both of which are on the dow. Much more on oil and the markets as we continue on power lunch. We have the oil close as well coming up at 2 30 p. M. Eastern. Do stay with us. trader vo i search. I research. I dig. And dig some more. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. There are no medals won for earning a living. Its just what you do for family. But its hard to build a future if you cant see past today. Thats why walmart is investing in the most important part of our company our people. Because a raise in pay, raises us all. Some neighbors are Energy Saving superstars. How do you become a superstar . With pg es free Online Home Energy checkup. In just under 5 minutes you can see how you use energy and get quick and easy tips on how to keep your monthly bill down and your Energy Savings up. Dont let your neighbor enjoy all the savings. Take the Free Home Energy checkup. Honey, we need a new refrigerator. Visit pge. Com checkup and get started today. Welcome back to power lunch. Im tyler mathisen. Here are this hours power points qug. The number of u. S. Oil rigs rising for the first time in 11 weeks. Another selloff on the street. Materials, health care, and utilities the sector leaders. Consumer discretionary the biggest laggard. And stock winners, plum creek timber and norfolk southern. There are your power points. You can visit our site at powerlunch. Cnbc. Com. You should be doing game shows. For years Corporate Executives have been replacing employees with machines. Could the same soon happen to them . Robots in the csuite . That is next. Plus, were watching these markets. The drop in oil is really hurting stocks. Well bring you more power lunch and track those oil moves in two. Meritrade trader offices. Ahh. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place that lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim . For all the confidence you need. Td ameritrade. You got this. Today, were seeing new technologies make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. I finally did it ew, you did it all right. Let sparkle paper towels clean it up. Do the math and youll see sparkle costs less. Plus its perfect for cleaning spills. Desktops. Windows. And chalkboards. Now thats what i call clean. Too clean . Sparkle. Because its a messy world out there. Welcome back. Im brian sullivan. When power lunch rolls on, well hit more on this retail wreck. Are things really as bad as they seem . Well, there may be a totally different story here, and were going to dive into that. Plus, it could be a dramatic 30 minutes for oil. The one price level you need to watch very closely. Were on it and the two charts that really grabbed our attention this week. Our stocks of the week are coming up. We have a lot to do but lets round it out with mandy and tyler. Thank you. Could your next ceo be a robot . Maybe your current ceo is a robot. Who knows. New report by Management Consulting Firm Mckinsey saying its knotts just manufacturing and service jobs at risk because of automation. With the Technology Available right now executive jobs could also be replaced by a machine. Joining me to discuss this is michael chewie, a partner at mckinsey company. Michael, really . Well, what we did when we looked at this research was not look at jobs individually. What we actually looked at was the activities that comprised jobs and thats the difference with our research. When we looked at all the potential activities that could be automated, in fact, we found not only are there activities that low skill, low wage workers do that could be automated but we found actually a significant percentage of the work that high wage, high skill workers, including ceos and people in the csuite do that could be automated. What were talking about is not replacing the ceo or cfo but replacing their brain power with an automated form of brain power to relieve them of a portion of their work. Thats exactly right, and we find this to be true. There are actually only about 5 of the options ccupations of al 800 that we looked at for which using current Automation Technology you could automate all of their activities. What we find is many different occupations have a significant percentage that could be automated. So, michael, give me some examples of the tasks that executives do that could be automated. The ceos or cfos. Let me give you three categories of tasks. One thing that is a significant percentage of their activity includes receiving reports and analyzing them, trying to derive insights from them. We have technologies now that allow algorithms that allow us to take these reports and derive insights from them. Secondly, analysis. Again, theres some aspects of analysis which now increasingly can be automated, and then the generation of documents and reports as well is another set of activities which many of our Senior Executives that we work with as clients do and, you know, most of them say at first theyre surprised, what . 25 of what we do could be automated and then they think about it and say, if you could give us 25 of our time back, we would gladly take that they certainly would. In order to refocus. Its in part managing paper flow and the analytic component of that paper flow. In other words, if i can get an algorithm that can tell me what i really know in one paragraph out of this fourpage document, is that the idea in part . Thats absolutely right. And many times its not a fourpage document, its often times not paper, but youre talking about large amounts of data. Weve studied open data and being able to derive insight from large amounts of data is becoming a basis of competition. But what you and i do would be irreplaceable by a machine, right . I think one of the surprising things is that actually there are some algorithms working on Financial Reporting very specifically. I love it. Michael, thank you very much. Take a 10q. On that note, were going to end it right there. Were done. Were toast. And the markets are up. Were cyborgs. That will do it for the first hour. Thanks for joining us all day today and this week. Have a wonderful weekend, everybody. Brian, over to you. Friday gift, i get an extra 40 seconds in the show. What will we ever do with it . Im not good at talking. Its 2 00 p. M. On wall street, lunchtime in albuquerque. The dow is down triple digits, oil approaching a very important level. Im brian sullivan. Melissa lee is at the nasdaq and happy friday, the 13th, by the way. And with this ominous date, it seems appropriate to talk about three big and growing concerns in the market right now. They are not scary, but they are things to consider. First, worries over retail. Many Retail Stocks are getting whacked. Some are down double digit percentages right now. Second, new signs of cracks in the ipo market. Why are Companies Pulling back . More on that in a moment. And, third, the continued collapse of commodities. Oil eyeing 40 a barrel. Folks, that have a very important level, and we are counting you down to the oil close at 2 30 p. M. Eastern time, 11 30 out west. We are going to dig into all of these, but let us start with retail. Nordstrom, macys, kohls, jcpenney all deep in the red at this hour. If you own those stocks, youre losing money today. We have a big retail panel. Here is the contention, stacy, and its my contention. Tell me if its bunk. Home sales are hot, car sales are red hot, cell phone bills are a couple hundred bucks a month, were eatsing out more. College costs are out of control and Health Care Costs are higher. Why are we surprised that Department Stores arent selling as many jeans as they used to . Well, we shouldnt be surprised when all those things are true, but something has changed in the last several months because youre hearing it from the great retailers and the not so great retailers that traffic has hit the wall. And its not just weather. And i think also you have to look at the tourism piece of the puzzle. We have to question how much was that actually responsible for driving growth at a lot of these retailers. Especially macys Flagship Store in herald square, all the people from europe who are having to pay a lot more because the euro goes less. Exactly. So all those things that you said are true. Then you pile on the tourism. Then you pile on all the retailers are chasing the same dream, off price beauty and its all looking the same. Jen, i used to call it the home and car indicator. Is it garbage or is there something there . Thats whats happening. We just mentioned the europeans not coming to spend but neither are the chinese, the russians, the brazilians. Some people have recently raised their estimates on Holiday Spending but nobody is raising it on apparel. Im going to push back on you, jan. I hear what youre saying maybe in Beverly Hills and manhattan, that falls. But if youre a midlevel retailer of teen apparel in iowa, youre not getting the brazilian money anyway but youre still down. So something is happening there, too. Well, thats right. What i was saying is what were seeing at the top end is the luxury spend is not happening because were not getting the tourist traffic. At the lower end its just what stacy was talking about. Were seeing all this business go online and thats really defusing the spending and were seeing all this money go into things other than apparel because apparel is down 3 . Deflation. If youre down 3 deflation, youre selling 5 more stuff. Youre still only up 2 . So its a very, very tough environment for any retailer to drive top line. Or mary, i guess the other option is some companies are just not being run very well. I agree with that. Right now weve got macys that is down. Theyve done a great job for a long time. But we have to look at three of macys top brands throughout the store are not performing. If they dont perform well, macys doesnt perform well. You look at kohls. You have a different set of issues. Theyre changing their Marketing Strategy that makes me fearful because theyre trying to mirror what jcpenney did that didnt work. You look at jcpenney. They have a host of issues. Nordstrom is very well run. Their omni channel is really good but they dont have a lot of the hot things that are happening out there. Were seeing some newness out there, theyre just not enough to offset apparel, to your point, and some of the tourism issues to your point. So weve got some big macro problems by big retail that are not working. Everybody loves to say the word omni channel and talk about how i still dont know what it means to be honest with you. Has something to do with the internet. I would argue forcing the Consumer Online actually hurts sales because youre taking away the impulse purchases. Youre not browsing. Im a woman, i walk into the store, i see it, i want it. If im online, i have to seek it out. So you are eliminating impulse purchases permanently. Well, thats why traffic has been down every quarter for the last three years and conversion in the store has been up. If you go to the store, you buy. The bad news is you dont go to the store. Five years ago if you went to the mall, you went to five stores while you were there and visited. Now you go to three. Why . Because youve already looked on your phone and gone, i want that, i want that, i want that and you go and buy it. So that is a big problem for traffic. What youre saying, if you guys are all right, thats not changing. Cell phone bills arent going away. The internet is not going away. And jan and i have talked about this in the past, we have too many stores in this country. We are over stored. What it sounds like youre saying is this could be a long term, secular trend. And we have new competition coming in. Retail needs to go on a diet. It needs to lose a ton more weight and at the same time you have pry mark and h m adding insult to injury. But its not going to lose weight when theres five restaurants all on one block and theyre killing each over on price to draw the customer in. Even though im close enough for you to push me out of this chair, the weather really hasnt helped sales in the short term. Oh, no, right . Here we with the weather. Dont go there. You went there. You promised me you were not going to go to the weather. I give up. Someone was going to go there. Can i add one thing, one thing we found at macys is that the buy online pick up in store has helped individual stores results when they go in to pick up. Stacy, you called it, the i am pulse buy. You have to get them in the story but everybody wants to be home and click, click, click. Here is a scarier retail theme, a lot of companies havent starting investing in omni channel. Kohls has just started. Decelerating top line, too heavy inventories, and walmart, we have to spend tons of money online. Enough bad everyone is bad news. Forget it, like no one is ever going to shop again. Very quickly lets go around the panel, give us a good idea. A company or a trend thats doing well. Stacy. I would stick with tjx and, yes, the Nordstrom Rack was soft today but i look at the international piece of the puzzle that can become 25 of their business and right now its about 10 . Massive opportunity. Mary . One big theme and one brand. One big theme, star wars, its going to be explosive because its all its both genders and all ages, something we havent seen in over a decade. The second thing i see coming back and doing very well is coach. Coach, wow. Unrelated to star wars i assume. Yes. Here is your new sith bag. Im going out on a limb here. That was a bold prediction. Im going to go easier. How can you not on nordstrom, macys and costco when theyre trading off. Because they may trade more off. But theyre not. They could keep going down. Theyre the two best omni channel retailers in the country no matter what you think of omni channels. Theyre going to get it right and theyre trading down at levels like theyre going out of business. He said omni channel twice and talked about the weather and es still in the chair. Knock him now. Happy friday. Great discussion. Another big concern the health or lack of of the ipo market. Loan depot pulls its Public Offering citing Market Conditions. Technology seems particularly vulnerable right now, and, remember, over the past week we had two shark tank sharks on this very show raising concerns about valuations. Here is what mark cuban and kevin oleary both had to say. I think inside of Silicon Valley theyre very insulated and i think theyre going through a bubble. Square is going oun a down round. When going public is a down round you know the valuations are out of whack. The uber 50plus billion valuation, snapchat, any of these deals raising money as if they were public already and yet theyre private deals, i think were going to have a really big problem. So what is going on in the ipo market . Lets bring in Kathleen Smith at Renaissance Capital which has an etf comprised of a basket of 60 recent ipos. Kathleen, always great to get your insights. One has to look at the ipos these days like a loan depot that are postponing and citing Market Conditions or who are going out but basically with a haircut to the valuation. Then you have the markdowns in the private market of Companies Like a snapchat, and you got to wonder if there is a bubble in the private world. What are your thoughts on that . Well, certainly i would start out by saying welcome to the new ipo market where ipo investors are in the drivers seat expecting some pretty heavy duty discounts so that they can make money in these deals. There is certainly a disconnect in the private market where there is what we would call irrational exuberance there when the Public Market is fairly disciplined and price sensitive. So theres no doubt about it, and square is going to be a real test because its pricing its ipo currently at about a 30 discount to its last private round and even at these prices were not so sure thats what it takes to get that rise that we need out of square. How important, kathleen, are the declines in fairly recent ipos or public comparables and in the example of snapchat getting marked down 25 in the private market, you have a twitter which is really not doing well. How much of a pressure is that on the ipo market . Is that something we should be watching . Certainly the Comparable Companies are key, and so if youre coming out, for example, in the case of square, everyone is going to be looking at paypal. Theres a very strong relationship between the dynamics of paypal and square. So the current publicly traded comps are important and then also just the conditions of the ipo market in general and, for example, we know that the ipos have been priced in this Fourth Quarter so far have been priced on average 17 below their ranges to get that, and weve had positive returns as a result. So the overall ipo market is looking for the kind of discounts to get a rise out of these in after market trading. Why else would anyone take a look at taking a risk on a brand new company. How long does that usually take . Will things get better come 2016 for the ipo market . Were setting the stage for that. In fact, so far in the Fourth Quarter our etf and the index has risen 6 . Thats pretty good knowing weve had a decline, so were starting were working our way out. For example, first data i think is a good way of describing it. They price their ipo 15 below their range and as a result are now trading a 10 above the ipo price. We need to see this, and i think it will make 16 a much better time but well have to see the returns come even through the end of this year. Kathleen, great to speak with you. Thank you, Kathleen Smith of renaissance. Brian . That was number two. Your third big fear in the market right now is what else, the continued commodity crunch. Crude oil down big again today, he said. It is friday the 13th. It is nearing that 40 a barrel mark. Crude oil now down 8 over the past week. Right now its off just under 3 . Here is the question. Will crude oil hold 40 bucks a barrel into the close. That is a key number we are told, and were going it find out in about 20 minutes from now when we hit that crude close on a friday. But before that, you are going to meet the man running a Company Whose commodity is up, and so is his stock. Plus, one of our favorite market guests says the american stock market is doing something rather interesting right now. What that is ahead. And later on, both melissa and i, stocks of the week. Mine is all about the emerald city. Melissas all about the valley of the sun. Those are bad hints. The names coming up. Stick around. Welcome back to power lunch. Im melissa lee. Yelp getting an upgrade to an outperform at rbc capital markets. The analyst citesing an improved risk reward. Fitbit pricing a secondary offering at 29 bucks a share although the size of the offering was cut to 3 million from 7 million. Disappointment sending the stock lower by 14 and a ton of names hitting 52week lows. Among them dollar general, western digital, and seagate. Nearly every major commodity is down in price this year but not the main product of your next guest. His average sale is up 12 yearoveryear. And, oh, yeah, so is the stuck. U. S. Concrete ceo bill sandbrook. Welcome. Thank you. We had a fund manager on two weeks ago talked about your company. We had never heard of it. The stock moved a little bit on it. He touted it. He said earnings would be good. They were. In this kind of environment, how do you have any Pricing Power at all . Well, let me describe the portfolio u. S. Concrete first. We have 160 concrete plants around the country but theyre regional. We operate in four major regional areas, San Francisco bay, texas, san jose oakland shgds and we have 31 plants in the new york city and new jersey area. Building boom. We operate in markets right now that are basically doing the best theyve done in the last 25 years. Are you effectively then, bill, a commercial real estate play . No, not at all. Commercial is very important to us. Apartment building construction, San Francisco leads it in the country. New york city has more growth. A lot of growth, yeah. In the last 25 years. Dallasft. Worth, you said you were there a week ago, its booming, and dallasft. Worth has the largest in migration of people because of all the corporate relocations. If construction or real estate turns down, then that would be bad for you. Well, we also the highway bill will be good for us. The multiyear highway bill in conference right now, been passed out of the house and senate probably will be signed by the president before the end of the year will add multiyear funti funding to other avenues. For people thinking about buying your stock, watch the highway bill. Watch the highway bill. Watch the markets we operate in. We have great visibility into our backlogs and future construction in those markets and its very, very healthy for the next two years in all of those major markets and we have a very consolidated platform for servicing all of that. I hope you have cnbc on in your headquarters. If not, put it on because for about a year weve been, especially this show, weve been talking about what oils decline is going to do to texas and it may impact texas. Has it at all . Its not impacted toyota is moving its headquarters there from california, has nothing to do with the price of oil. Same with liberty mutual, same with state farm. Its a generator of jobs and a great Business Climate because, remember, i operate mostly in dallasft. Worth metroplex. Almost totally insulated from oil at this point. Bill, it was a real pleasure to meet you. Thank you for coming in cnbc and coming to your new jersey headquarters. Bill sandbrook, u. S. Concrete. Stocks are off session lows on the day but still in the red. What should you be doing with your money ahead of the weekend . We have 348 billion of advice coming your way. And were just minutes away from the oil close. Were headed live to the my next when power lunch returns. Your next guest put out a Research Note this morning entitled the u. S. Stock market resides at a unique zip code. Its a nice headline but what does it mean and what does it mean for your money . Lets bring in the man who wrote it, jim paulson, chief investment strategist with Wells Capital management. Unique zip code could mean two very different things. It could be 902 110 swanky bev hills or the exact opposite. To which one does the u. S. Stock market reside . I guess i think that the u. S. Is about the only place in the world that is facing full employment for the first time. Everyone else is a long ways from it, still pushing upward in their economies. Were going to have policy officials now starting to move the other direction, moving the support away from the financial markets. I think that puts us in a ewe nege positi unique position. Its dominated stocks globally for the last four years. I think it puts it in a bad zip code, if you will, because i think its left the rest of the world in a much better value right now if youre comparing u. S. Versus overseas investments. Overseas markets are way under owned by most portfolios because weve all given up on hope that theyre ever going to start to outperform. I think that they have hospitable policy officials where our policy officials are turning hostile for the financial markets, and their companies are still kind of recovering from recession, a long ways from maximum profit margins. They have a lot of upside earnings leverage where u. S. Companies i think are in an aging, rapidly aging earnings cycle and earns will not grow as fast and all those things are because were in a different zip code than the rest of the world. Are you saying that companies outside of america are a better bet for our viewers money . I am. I think its both true in the emerging world as well as the developed world mainly because i think those companies have greater earnings potential Going Forward than u. S. Companies and also because theres on average the stocks are a better relative value and you get the kicker that probably Interest Rates arent going to go up as fast as they are here with the fed facing the prospect of Wage Inflation now and the need to start raising Interest Rates. Do you need to believe, jim, that Interest Rates wont rise as quickly as we all might think in order to be invested in the emerging world . The problem with some of the commodity related economies in the emerging world is theyre in a commodity slump right now and the last time the fed was in a rising rate cycle, commodities werent doing what theyre doing now, and so this time there might be a bigger impact from any rate increases. Yeah, i think that its a good point, and i think for the emerging markets to do well, were going to have to have Commodity Prices finally bottom out, melissa. Im one that believes that 2015 is a year of bottoming Commodity Prices. 2014 they collapsed. This year just look at crude, it was basically 45 in midjanuary this year, and it was just 45 about two weeks ago. So i think its been more bottoming this year likely to go up next year rather than a continuation of a decline in Commodity Prices, but thats important. If we dont have a bottoming and some revival, i dont think the emerging markets will do well, but i suspect that next year were going to have a bounce in Global Economic growth being stimulated overseas by a lower Commodity Prices as a tax cut, by lower bond yields almost everywhere around the globe, and by weaker currencies. I think were going to be surprised about overseas economies bouncing their growth rate. Jim, before we let you go, totally, totally separate question. Why do you think that retail has been sucking wind so much lately . Youre right near the mall of america so i have to ask. You know, brian, i think the consumer is doing better than its given credit for. I think the stocks are starting to suck wind a little bit, but really we came off a real personal consumption growth rate in the Third Quarter of 3. 2 , real retail sales in this quarter even with todays number in real terms, theyre still up 2. 5 . And you can see what were doing with automobile sales and housing activity. I think the consumer is in better shape. I really think were going to have a pretty good holiday selling season with the job market as good as it is, with Balance Sheets restored, with Interest Rates low, gas prices low, with confidence fairly high along consumers. I think well be surprised. I had no idea how you would answer that question but i love the fact you agreed with my thesis so youre welcome on anytime, jim. Homes and cars are strong, Everything Else stinks because homes and cars are strong. Thanks. Appreciate that. Have a good weekend. The spdr etf not doing well. Lows of the day down almost 4 led down by, you guessed it, nordstrom and jcpenney. The final oil trades are set to cross for the week. Jackie deangelis at the nymex for a very important close for crude oil. Jackie . Hi, brian. It is an important close, and certainly not helping that the iea was out this morning saying we have a record glut of oil. 3 billion barrels in storage. What this means for wti, where pricing goes from here, all when we come back on power lunch. Its time for the your business entrepreneur of the year. Josie in fargo, north dakota, is hard at work on sundays. Most companies in the downtown area are closed that day, but josie supports the open sundays campaign. She wants people to have a place to shop every day of the week to help fargo thrive. For more watch your business sunday mornings at 7 30 on msnbc. We thought wed be ready. But demand for our cocktail bitters was huge. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding. Fast. Our amex helped us fill the orders. Just like that. You cant predict it, but you can be ready. Another step on the journey. Will you be ready when growth presents itself. Realize your buying power at open. Com. To shop every day of the week to hi, everybody. Im sue herera. A suicide bomber attack during a shiite religious service in baghdad killing at least 21 people while injuring 46 others. The service was for a Shiite Militia fighter who was killed in a firefight with isis. Isis has claimed responsibility for the attack. A secret Service Agent who worked at the white house in court today facing state and federal charges for sending sexually explicit photos to an Undercover Police officer that he thought was a 14yearold girl. Lee robert moore was arrested earlier this week before being released on a 105,000 bond. Ben carson responding to Donald Trumps harsh attacks telling the media in South Carolina that he thinks americans are sick and tired of personal destruction. He said they want facts instead of getting down into the mud. And the fda issuing long awaited food safety rules to prevent food borne illness outbreaks. The government will have increased oversight of farms involved in the countrys food supply and workers will be trained in hand washing and other basic hygiene. Irrigation water will also be monitored for harmful bacteria. Thats the cnbc news update this hour. Brian, back to you. All right, sue, thank you very much. Oil is closing. Lets get back to Jackie Deangelis at the nymex. Hi, brian. It looks like well close under 41 a barrel. We tested lows today of 40. 22. Of course, a lot of speculation of when were going to break through this critical 40 level. Key psychological mark for crude. I want to point out here when have we been under that level since july of 2004 . Well, not sips the financial crisis and not since august of this year. So were really coming close to another historical landmark in terms of the trading range for crude oil prices. Going down for very real fundamental reasons, that glut i mentioned before, 3 billion barrels in storage. Demand the iea saying its going to tick down. Wet a slew of other reports this week that did not add any helpful information or supportive information here. So that three handle looks like its just around the corner. This has very real implications not just for the broader commodity space but also for the equity market. Back to you. Jackie, thank you very much. So what is ahead for oil . Lets find out. Kyle cooper director of research with iaf advisers. Kyle, it may not be today, but do you believe we will have in the next couple trading days a close under 40 a barrel . It certainly looks like that. The technicals after an early november spike have really plummeted and as jackie just mentioned, iea came out today saying their inventories they look at were close to 3 billion barrels and here in the u. S. When we include the sbr they jump back over 2 billion barrels this week. Theres just theres a lot of supply out there. If we close below 40, today, monday, tuesday, next week, whatever, whats the next stop . Then obviously i think youre looking at the 37. 75 low that jackie alluded to at the end of the august on that one meltdown day when just everything was coming unglued. That certainly is the next technical stop and the next point i think a lot of people would be looking at. What if we hold . Any sign of a turn that so many have been calling for . You know, the problem is that everybody keeps looking for the turn and for the improvement and im one of those. I dont think that 40 crude is enough to supply the world longer term, but between now and longer term can be a trading o livon and a lifetime and when you look at the comparisons, the inventory comparisons, were now at 182 Million Barrels above last year here in the u. S. On a total petroleum level compared to the fiveyear average, were almost 200 Million Barrels above the fiveyear average, and those are both records. Weve never had these kind of surpluses before. So, you know, its really hard to get bullish when if youre just looking at u. S. Petroleum stocks. Clearly theres a number of other factors. But this is whats amazing and seems so confounding. Its like somebody is poking themselves in the eye over and over again and they cant stop, right . Russia is pumping, saudi arabia is pumping, were down a little bit but bill over 9 Million Barrels a day, iran is up, africa is up. Who is going to blink . When is someone going to blink and slow production . Thaeeyve just gotten really really good at it and theyre their own worst enemies. Weve actually increased crude Oil Production in the u. S. For three weeks in a row. Rig counts were up, only two, but they were up. Yeah. So, i mean, then comes the situation of, okay, you have to maintain cash flow. So, you know, when you know what you do and you only really know one thing and thats drill and youre Getting Better and better at it, then more and more comes out of the ground with less and less. So really theyre their own worst enemies because theyve done a phenomenal job of getting stuff out of the ground with less and less. Its like the scorpion and the frog fairytale. The frog takes the scorpion across the lake and says are you going to sting me . No, i wont. The scorpion stings him and they both go down. Why did you sting me . Its my nature. Its their nature. Its what they know what to do. And many of them need to do it because like you said, the cash flow. Exactly. Kyle, have a good weekend, buddy, thank you. You, too. Thank you. As the price of oil falls so do some of the trment stocks. The dow transport is down 12 . Lets bring in josh dietz. Great to have you with us. How big of a problem is the falling price not only of oil but also coal, other commodities like copper, particularly when you bring to the table today a railroad stock. So it just depends on within the infrastructure universe, we actually try to avoid as much commodity risk as possible but we try to invest in companies that can benefit from it. So on the rail side, we likeu np and they have been hurt somewhat this year. Car loads are down 5 but it shows a great resiliency of a company like that. Their earnings are only down 2 on the back of that. The comps get easier for next year. Theyve shown increased productivity. Trading speeds were up 8 last year. We think theyre doing the right thing in this environment and can benefit. At the same time, do you need to sort of predict when theres going to be at least some sort of stabilization, if not an Inflection Point in the commodity complex in order for you to be truly bullish on a name like unp . As long as they can very resiliency in this environment i think were okay because when it does increase, and there are other benefits certainly on the automobile side where theyre increasing traffic, theyre going to benefit there. So once everything is working, then the stock should take off and right now we think it should be fairly stable as they prove this year theyve been able to stabilize earnings in this environment. O. R. Is at one of the lowest levels. Obviously the drop in fuel prices is helping the airlines, but youre bringing a stock here today that is an operator of airports and roads as opposed to an airline stock. So what do you like about this stock . How do they make money . So they make money for several reasons. Increased passenger this is vinci, by the way. So they own 4,000 kilometers of road globally and certainly people are driving more, the traffic is increasing, and they own 25 airports globally. Just this week they named the winning bidder for two airports in japan that have over 35 million passengers in those two airports. Just to put it in perspective, laguardia has 27 million passengers and traffic grew over 7 at those airports last year. They make money as more passengers are flying through those airports and also shopping at the airports. If you notice, when you go through the airports now, theyre basically mall. They have a captive audience. Its a great opportunity to play the growth in traffic. One point, traffic globally this year in airports is supposed to grow ruff roughly 5 . Over the next 20 years traffic should grow. We think this is a great opportunity to own the owners of infrastructure globally and thats what we try to do at the Alpine Global infrastructure fund. And the other way to play frrveth is tower for cell phones. You like crown. I wonder what you like about cci over american tu ower. They have 40,000 towers in the United States and 16,000 fiber miles which support the Small Cell Networks. The Small Cell Networks is only 8 of the business but its growing at 30 . Its a great opportunity. Mobile video usage is expected to grow by 400 by 2020. We expect them to be a beneficiary of that. We want to own the owners of the infrastructure. Their affo is continuing to grow. Josh, great to speak with you. Josh duitz of alpine. Up next, five of the top analyst calls that are moving the market. It is called street talk and its straight ahead. We talk about some infrastructure names as well. Youre watching cnbc, and we are first in business worldwide. The dow is down by 175 points. Pretty much at session lows, down a full percentage point. Take a look at some of the biggest losers within the Dow Jones Industrial average. You can see the real themes of the market playing out. Weakness in retail as you see there with nike and home depot both down sharply and cisco on the back of disappointing earnings. That stock is being whacked down 7 . It is time now for street talk. Analyst recommendations on the stocks we think you need to know about. This falls into your previous interview, a couple engineering and construction. Aecom technology and Chicago Bridge and iron. They like aecom and Chicago Bridge and iron a lot more. They think the companies are less exposed to the energy issue. If youre not building wells, maybe some of the companies will get hurt. The analyst has a strong bias to the, quote, special situations of those names. Interesting commentary about avoiding the energy space obviously, about you thats also something that Portfolio Manager at Alpine Global infrastructure brought up as well, specifically in regards to the railroads. Up next year, gamestop getting a downgrade from Pacific Crest to a sector weight. The stock was approaching the price target and hes seeing the clear impact from digital. Meager physical Software Sales growth and mpd data is indicating a decline of 5 for the three months ending in october. The slate of games in 2016 looks okay but its not going to be enough to spur growth here. Ill tell what you doesnt look okay is the average analyst stock price target. Of the analysts that cover the name the average target is 50. 20, about 28 more than the stock is right now. So either well see more price target cuts or some of the analysts have to come out and start defending gamestop. Your third stock is carmax. Buckingham research beginning coverage with a buy. The target 70 bucks a share, about 25 upside. The analyst likes the used car space. He says carmax has first mover advantage. Thats why he likes the stock. You have to wonder though what role having record numbers of vehicles sold in the United States is having on the used car market when you can go out and buy a new car pretty affordably these days and with the help of loans, of course. Fourth stock, f5 networks. Two downgrades hitting the stock after they say theres no near term catalyst saying the stock is stuck, this is a good quote, purger toal state between growth and value. The only catalyst could be an upgrade cycle. Thats a oneoff and it isnt expected until the second half of fiscal year 2016. This is a new 52week low on the stock today. Paradise lost other than Paradise Found i suppose. I will say this about f5. It has Short Interest of 10 of its float. The available shares out there on the market. Thats pretty high. Finally, your under the radar name of the day is extra space holdings, exr, its not that small despite being under the radar. Its got nearly a 10 billion market cap. Raymond james upgrading to a strong buy from an outperform so they like it like it. The original target of 80 was hit so they bumped the target to 90. They say the fundamentals are terrific and the company has a moat around it with limited supply threats. You see the nice chart and its the self Storage Space is a bright spot within the reit sector but something to watch with rising rates. How are these reits going to react. Maybe retailers could store all their excess inventory exactly. In these self good idea, brian. Were bringing worlds together, melissa. Exactly. The market slide is continuing right now. Stocks nearing session lows. The nasdaq the big loser on the day. Were setting you up for the close when power lunch returns. All right. A weak end to the week. The Dow Jones Industrial average is down 188 points. Folks, that is a session low. Dont need to remind you what happens generally when you start losing steam toward the close. Ill let the traders speak to that, but generally it is not good. This is the heat map behind me here, and i think thats kind of a misnomer. Its kind of a cool map today. The only sector that is up, materials, freeportmcmoran is leading that group and Everything Else is in the red. Consumer discretionary, we talked about nordstrom, jcpenney, their woes in the market today and really this week. No surprise Consumer Discretionary is down 2. 43 . Were headed for the first weekly loss for the stock market in a couple months. Time now for trading nation. How much more downside if any could be ahead because we cant just say downside Craig Johnson because we could turn. Today short term bottom. What are you seeing . Thanks, brian. What were seeing with the Broader Market is we certainly have lost momentum over the last week or so. From our perspective not too surprising given the strong october that we have seen. If were going to get a little backing and filling here lets put this in the context that the bigger longer term secular bull market it intact. You would have to have a close below 1800, 1820 to violate that. From our perspective on the shorter term trade you have area support between 2020, 2040 a little bit of area ofupport and after that right around 2,000. So from our perspective we have maybe about another 1 down side. Before i think the market will try to rally. Theres a lot of concern out there with whats happening in the consumer space for obvious reasons, the energy patch and also in whats happening in basic materials across the board. You sound reasonably sang win, not that concerned, short term profit taking. Yeah. Weve seen some of this before and what were seeing is kind of a rotation. Every sector is kind of getting some profit taking coming into play. A month or two ago it was the healthcare sector, now its starting to find its footing. Now its the consumer cyclical sector. There is not a lot of shopping for winter coats going on in minneapolis right now. Youre seeing profit taking across the board in these sectors but the primary trend is up and that has not changed. Just a note to all the good people of your fine state it will eventually get cold, you can still shop even when its not cold out. In fact, its more pleasant. Craig johnson, thank you very much. Thank you. Shopping tips. More trading nation, head head to our website tradingnation. Cnbc. Com. Stocks right now are at session lows, oil getting hit hard today. Oil this week down 8. 5 . Every time you think oil is ready to do that dance higher, no one asks it out on to the dance floor. In fact, Oil Next Week possibly could go below 40 bucks according to our guest. Youve heard from kyle cooper. One equity strategist says the price of oil may be more important to the stock market than the decision on Interest Rates. We will ask him why when power lunch rolls on. Stick around. The nasdaq just pushed to a new intraday session low but still there is one sector within the nasdaq doing well and that would be the biotechs. The ibb intraday is up by about 1 still. Were going to give you the low down on which stocks to watch and why. Thats tonight 5 00 on fast money. Brian. Just a reminder, folks, stocks are at session lows. In fact, right now only three dow components are higher, dupont, caterpillar and merck. Cisco your worst performer, cisco down nearly 7 . Got to be one of the worst days in a long time. Lets welcome in matt maley. I wish the market was doing better today, we could end the week on a happy note. If youre short you will probably have a nice night tonight. Your note caught our eye this morning. We are sort of the energy and oil show here, i just like it, and you wrote that the fed yes is very important to the stock market, but so is oil. How and why . Well, its one of the key things with oil is that over time everybody worries about, well, geez, if oil is down what is it indicating, is it indicating that demand is weak or theres too much supply . At this point that really doesnt matter why its down. The fact that its down is a problem for stocks because it you know, its so important to the high yield market. The high yield market is one of the best leading indicators for stocks and today of course we have high yield being 15, 16 im sorry, oil being 15 to 16 of the high yield market, the most its ever been, with oil down at these levels a lot of these companies could not service their debt. If they cant service their debt at 60 oil they wont do it at 40 oil or lower. This is causing stress on the high yield market, it causes stress in other credit markets and stresses in the credit markets are never good for stock. What youre saying no. No. What youre saying is so important. Weve said it before on this program, im going to keep saying it, this is the whole point, theres this whole theme of low oil is great because gas prices go down and mom and pop have extra money and thats true and im glad mom and pop have extra money, thats fantastic. What youre saying needs to be reiterated. All these Oil Companies issued all this dead by some account hundreds of billions of dollars and this was unlike any previous oil bust. We didnt have this level of dead. We have never, correct, been here before where oil had done this but the Balance Sheet has been so levered at the same time. Exactly. And thats why and, you know, weve seen it before. I mean, obviously the most extreme example was in 2007 2008 when the whole entire credit market started to fall apart, but it just whenever you have stresses, especially when you have markets that are as leveraged as they are because Interest Rates are so low it exacerbates the situation. This may not be a problem until the end or maybe next year. Unlessil bounces back its going to have a negative effect on the credit markets, in particular high yield markets but credit markets in general. All right. Youve said it, weve said it, its worth saying again. Thank you very much, matt. Have a great weekend. Lets wrap up the show with our melissa and my stocks of the week. Its not recommendations just things that caught our eye. I hated my stock of the week. Why . We talk about amazon so much but i had a conversation in boston for a guy who works for an Enterprise Cloud computing company, he said amazon is killing it, doing great, taking everybodys business and web services rocks and stock continues to soar. Morgan stanley just lifted its price target and said aaws are huge component of growth. The stock for me is in the materials space, even though materials are up in todays down session Freeport Mack Moran is down 18 on the week. Copper prices hitting a 6. 5 year low. Its not just freeport mcmoran, glencore was down 26 . I wonder if they will step in and buy more freeport. Melissa, have a great weekend. You, too. Thanks for chg with a, everybody. Closing bell begins right now. And welcome to the closing bell on this friday. Im kelly evans here at the New York Stock Exchange. Tgif. Im bill given. A lot of news hitting stocks. The Broader Market under pressure, oil declining, pulling down Energy Stocks for the second day in a row and weak died ans from cisco sent shares of that dow component lower by more than 6 and there are many other stories as well. Oh, my gosh. Retail wreckage in full force today. Take a look at nordstrom, also jcpenney. Fossil, all getting hammered. Were talking down about nearly